Worst Startup Traps to Avoid When Beginning a Business
When starting a business, there is no shortage of problems that can arise. From marketing to the financials to hiring a crack staff, there are about a million things to keep track of, which can lead to costly mistakes.
The possible mistakes often occur when business owners have undertaken far too many tasks, for they often have too many things to do with few resources to get them done. Many entrepreneurs start businesses while also working full-time, as they are financially ready to depend solely on their startup. With a divided focus, things can slip through the cracks and an onslaught of mistakes can hamper down the business.
Because these mistakes can be difficult to recover from, here are a few startup traps to avoid in order to minimize any costly mistakes.
Hiring In-House for All Departments
Many startups cannot be run solely by an entrepreneur, as there are too many facets to the business that need constant attention. As such, many decide to hire in-house for all departments, believing that to be a more efficient way to run a business. However, for brand new companies, hiring employees for all departments can be extremely expensive, for each employee requires a salary and possible benefits. For a company that is barely yielding a profit, this can be detrimental to the financial stability of the company.
Instead, look to outsource certain departments to other companies. Outsourcing is a smart way to save your business money without sacrificing any area of your business’s success. For instance, look to outsource departments like payroll, accounting, and human resources. All of these areas are key to a business’s success, and outsourcing them is an effective and efficient way to conduct business.
Picking the Wrong Co-Founder
Many startups need co-founders to help share some of the responsibilities. However, choosing a partner is not a matter to take lightly, as a co-founder has the ability to make or break a company, especially if the co-founder was not the mastermind behind the startup.
Though partners can help share the financial burden, the resources, and skills, it is key to vet a potential business partner thoroughly, otherwise, the future of the business could be in jeopardy.
Skimping on Quality Talent
These days, having a mobile app, a website, or any other tech related resources is imperative to diversify the way in which customers can view your content. Many startups tend to skimp on quality talent, as it can be too expensive to keep up with it. However, paying for the right resources can yield a better return investment, for the better the content is, the more attractive it is to customers. Thus, when creating an app for your business or hiring a website designer, for instance, be prepared to pay for quality talent.
Not Researching Investment Opportunities
Raising money for your business and making the right business investments can be challenging, especially if you are starting the business alone. With the dip in the economy a few years ago, banks have been especially particular about who they lend money to, denying many startups a loan. Without a loan from an established bank, many startups seek out different avenues for loans, some of which are legitimate options while others are loan scams or loans ridden with hidden fees and fine print.
Before accepting a loan from an unknown company, do your homework and research each company thoroughly. Speak with other businesses who have received a loan from the same company, as they can offer your insight into what a working relationship with the loan company looks like.
Moreover, before signing onto a loan, make sure you have ruled out all other options, including angel investors, loans from family or friends, or government grants.
Underestimating the Amount of Time and Money Involved
Lastly, many do not realize how much time and money is involved with a startup. Starting a business from scratch will take time to gain momentum, which can leave you working long hours and shelling out big bucks. Though the beginning stages of a business are challenging, if the business takes off, those countless hours spent networking and reaching out to customers can help propel your business to the top.
Mistakes will happen in business, but the amount of mistakes can be minimized with hard work, determination, and a bit of research.
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